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BDO: How Financial Institutions Can Evolve with the Digital Customer

2021 won’t be the first year that financial institutions have to play catch-up to meet consumers’ evolving financial needs, but it may be the most consequential as the COVID-19 pandemic accelerated customers’ adoption of technology, presenting both opportunities and challenges for banks.

Some financial institutions were already implementing digital customer offerings such as mobile banking, digital account opening and real-time financial management dashboards. But more than 3,300 bank branches closed last year, and record-low rates have cut interest margin. Among these challenges were a variety of factors impacting the consumer experience, including:

  • Service offerings lacking an integrated look and feel because they’re provided by a mix of different software and software-as-a-service (SaaS) partners
  • Siloed data in core platforms that limited enterprise access to tribal knowledge and required specialised technology skills
  • A lack of customer consolidation across wealth, banking and mortgage service platforms that did not support a clear 360° view of the customer for cross-selling efforts

Further discussing how financial institutions can and must evolve with the digital customer are Mark Houston, Managing Director; Financial Institutions and Specialty Finance National Practice Leader at BDO, and Bill Topel, the National GTM leader for Financial Services for BDO Digital. Between the two of them there is 60 years worth of experience in IT and finance.

Bill Topel, the National GTM leader for Financial Services at BDO
Bill Topel, the National GTM leader for Financial Services at BDO

Financial institutions have come to realise that the changing landscape requires more advanced and efficient services for an elevated digital customer experience beyond fundamental expectations such as mobile banking. As a result, banks must focus on technology services that offer customer personalisation, automated processes and real-time, data-backed insights to succeed in a post-pandemic environment.

While bank executives are feeling the urgency to enhance their service offerings, adoption has been slow up until recently. According to BDO’s 2021 Financial Services Digital Transformation Survey—which polled 100 C-suite executives at middle-market banks, credit unions and other lending institutions—the digitisation of the customer experience is the top-cited trend expected to disrupt financial institutions in the next year. And it’s not a moment too soon: Just under 30% of financial institutions are currently implementing a digital transformation strategy, but 77% plan to increase their digital investments in the next year.

Mark Houston, Managing Director; Financial Institutions and Specialty Finance National Practice Leader at BDO
Mark Houston, Managing Director; Financial Institutions and Specialty Finance National Practice Leader at BDO

Those who fail to evolve with changing consumer habits will be easy to spot, as the gap in digital offerings widens over time with those who have centred or reimagined their operations as a ubiquitous digital experience stepping ahead. According to the survey, this division is accelerating. 61% of financial institutions are adding new digital projects, 51% are revising their long-term strategic vision, and 48% are accelerating some or all of their existing digital transformation plans. The ultimate goal? Develop a long-term relationship with customers by offering them services that are relevant based on their life-stage and current financial needs. To that end, 46% of financial institutions are planning to capture user information online and implement data-driven personalisation according to BDO research.

Here are the top three advanced technology services that banks intend to implement this year to improve the customer experience and make operations more efficient:

  • Location-based offers: Location-based offers allow banks to identify the location of their customer and deliver custom engagement by sharing relevant, geo-specific content and insights with the goal to create a more meaningful interaction. With this offering, financial institutions are able to leverage the widespread use of smartphones and the data they can collect to generate personalised services, differentiate their offerings against the competition and engage with customers, all at the push of a button. At the same time, location-based offers can help financial institutions optimise their campaign planning and target the right demographics.
  • Robo-advising services: Robo-advising services can now provide customer service for both routine bank transactions and advanced financial services guidance without intervention from an employee. Through the financial institution’s mobile application or website, “robo-advisors” are able to share automated financial planning services, collect customer data and responses, advise on their long-term goals and more. Because this service is an online offering, costs are typically low for financial institutions and free for the user, but oftentimes requires an account balance minimum. Robo-advising services can be an effective alternative to traditional services as they’re accessible to the customer 24/7 and provide the added benefit of expanding the financial institutions’ understanding of customer needs, interests and concerns. No matter the time or day, customers are able to access a financial institution’s services to address their advanced financial planning needs.
  • Digital wallet: Forms of currency have significantly evolved over time—from cash to credit cards and now to digital software. A digital wallet allows users to access their account information and passwords for cashless transactions. Whether they’re transferring money through another user’s digital wallet or completing a purchase through a digitally compatible point of sale system, digital wallets allow for real-time transactions and account activity tracking, sometimes in multiple currencies. With this offering, financial institutions are also able to collect insightful customer data, which informs them of their customer’s financial history and habits. In turn, organisations will be better equipped to effectively engage with their customer base.

As digital trends expand across the industry, new technologies will only strengthen over time—so it’s imperative that financial institutions assess their legacy systems to ensure they are compatible and able to operate with the new, advanced service offerings. Customer needs are evolving—fast, and they’re willing to change their financial service provider if they’re not met, making digital adoption critical to long-term success and competitive advantage.


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